Stocks closed moderately higher amid light volume to reach new multi-year highs after a slew of economic news, including rising inflation and strong regional manufacturing data.
The Dow Jones Industrial Average rose 29.97 points, or 0.24 percent to close at 12,318.14, the highest close since June 5, 2008.
Among Dow components, Coca-Cola and DuPont rose, while American Express and Hewlett-Packard fell.
The S&P 500 rose 4.11 points, or 0.3 percent, to close at 1,340.43, the highest close for the broad market index since June 19, 2008. The S&P 500 is now trading at more than double its lowest level during the financial crisis.
The Nasdaq gained 6.02 points, or 0.2 percent, to close at 2,831.58, its highest close since Oct. 31, 2007. The tech-heavy Nasdaq is only 27.54 shy from its multi-year high of 2,859.12, hit on Oct. 31, 2007.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
Among key S&P sectors, materials, energy and consumerstaples rose, and financials fell.
The firmer tone to the market, a day after the major indices all reached multi-year highs, largely reflected strength in the economic data, said Tom Schrader, managing director for U.S. equity trading at Stifel Nicolaus Capital Markets.
"I think most of the news we saw this morning was generally bullish," Schrader said, adding, "A little bit of inflation is a good thing."
Consumer prices rose slightly more than expected in January. The overall consumer price index gained 0.4 in January, while the core CPI, which excludes volatile food and energy prices, rose 0.2 percent, the Labor Department reported. (Read more: Whiffs of Inflation, but Strength in Some of Thursday's Numbers.)
The market should continue to do well, said Keith Springer, president of Springer Financial Advisors in Sacramento, as long as the Federal Reserve keeps buying bonds to stimulate the economy. Springer said the economic data released Thursday confirms "this economy can’t stand on its own without the stimulus."
Another positive for the market: "You still have a non-believing public," Springer said. Many individual investors remain sidelined, or have their money in bond funds, and haven't participated in the market's surge over the last few months. "The trading public has been out of this market for a long time," he said.
In geopolitical news, Iran continued to say it planned to move warships through the Suez canal in an action Israel called a "provocation," although news reports differed on Iran's true intentions.
Oil prices were mixedamid the news reports out of Iran, and amid further unrest in the Middle East, including news that police unleashed an attack in a square filled with peacefulprotesters in Bahrain.(Read more: The Quiet Before the Storm?)
Brent crude fell below $103 a barrel, while U.S. light sweet crude rose above $86 a barrel, narrowing the spread between the two oil benchmarks.
The higher oil prices buoyed energy stocks, with more than 70 percent of the sector higher for the day. Conoco Philips , MarathonOil and Sunoco were among the biggest gainers.
Williams Companies led the sector, however, jumping after news the energy company plans to split into two entities, with one company focused on exploration and production and the other focused on infrastructure, such as pipelines.
And shares of Apache ended flat after the independent oil and gas company released results that fell short of expectations. Apache has operations in Egypt, but the company said they have not been affected by the political unrest.
In earnings news, Duke Energy gained despite reporting earnings results of 21 cents-a-share, which fell shy of analyst expectations for 23 cents, according to Thomson Reuters I/B/E/S.
Coca-Cola gained after the drinks maker said it would boost its quarterly dividend to 47 cents a share from 44 cents a share. Rival Dr. Pepper/Snapple also advanced after reporting fourth-quarter earnings that beat Wall Street expectations, and delivered a positive outlook.
Also, Cliff's Natural Resources skyrocketed after reporting its fourth-quarter profit more than tripled on higher sales, a result that far exceeded analyst expectations.
Weight Watchers soared more than 30 percent after its result beat expectations. The provider of weight management services said its fourth-quarter profits that more than doubled on higher sales from its Internet business.
Among tech companies, NetApp sank after reporting a hit to sales from shortages of components, an issue the data storage and management company expects will continue to plague the company. NetApp's fiscal third-quarter earnings, however, skyrocketed 60 percent.
Nvidia , however, gained after the chip maker beat expectations for the fiscal first-quarter on strong sales of microchip processors for smartphones and tablets. Semiconductor sectors rose overall. The iShares Semiconductor exchange-traded fund rose more than 1 percent.
Apple declined amid news reports that CEO Steve Jobs will attend a meeting with President Obama, along with execs of other top tech companies, including Facebook CEO Mark Zuckerberg and Google CEO Eric Schmidt, Reuters reported. Also, the National Enquirer published photos of a Jobs, looking thin, and arriving at the Stanford Cancer Center.
Retail apparel stores were mostly higher on Thursday. Abercrombie & Fitch rose a day after reporting strong earnings, and after Susquehanna raised the teen retailer to "positive" from "neutral," and boosted its price target to $72 a share from $55. RBC raised its price target for the company to $57 a share from $50. Foot Locker , Aeropostale , and Chico's also led retail stocks higher. Foot Locker announced earlier this week that it would raise it's dividend by 10 percent.
Volume on the consolidated New York Stock Exchange was 3.7 billion shares, while 882 million shares changed hands on the NYSE floor.
In other economic news, the Philadelphia Federal Reserve index roseto 35.9 in February from 19.3 in January, the highest reading since January 2004. The prices paid index rose 13 points in February.
Leading indicators, meanwhile, were up a slight 0.1 percent in January to 112.3, dragged down by a drop in building permits and continued softness in the labor market, the Conference Board reported. The leading indicators for December were revised down to a 0.8 percent gain.
The government also reported that initial claims for unemployment rose more than expected last week. Claims rose 25,000 to a seasonally adjusted 410,000, according to the Labor Department. Economists surveyed by Reuters expected claims to rise to 400,000 from the previously reported 383,000. The government revised last week's figure upward to 385,000.
The $9 billion 30-year auction of Treasury inflation protected securitiesgarnered strong demand, and was priced to yield 2.190 percent, with a bid-to-cover ratio of 2.54.
Meanwhile, gold rose to close above $1,384 an ounce. The dollar fell slightly against a basket of currenciesas the euro rose.
In Europe, Nestle reported an acceleration in underlying sales to 6.4 percent in the fourth quarter and said it was confident of achieving 5-6 percent sales growth in 2011.
France’s biggest bank BNP Paribas reported a rise in fourth-quarter profit, but missed forecasts. European shares closed near a 29-month high. The FTSEurofirst300 index closed flat.
On the Calendar:
FRIDAY: Earnings before-the-bell from Campbell Soup.
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